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EX-31.1 - MEDISAFE 1 TECHNOLOGIES CORPv222996_ex31-1.htm
EX-32.2 - MEDISAFE 1 TECHNOLOGIES CORPv222996_ex32-2.htm
EX-31.2 - MEDISAFE 1 TECHNOLOGIES CORPv222996_ex31-2.htm
EX-32.1 - MEDISAFE 1 TECHNOLOGIES CORPv222996_ex32-1.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2011

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 333-161914
Medisafe 1 Technologies Corp.
(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation)
46-0523031
(I.R.S. Employer Identification No.)

c/o Jacob Elhadad
5A Hataltan Street
Jerusalem, Israel 96926
Phone Number 972-77-3318877
Fax number 972-77-3318879
 

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     x   No     ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    ¨ No    x

As of May 16, 2011, 56,903,309  shares of common stock, par value $0.0001 per share, were issued and outstanding.

 
 

 

TABLE OF CONTENTS

 
Page
PART I
 
Item 1. Financial Statements
F-1
Item 2. Management’s Discussion and Analysis or Plan of Operation
3
Item 3 Quantitative and Qualitative Disclosures About Market Risk
6
Item 4 Controls and Procedures
6
   
PART II
 
Item 1. Legal Proceedings
7
Item IA. Risk Factors
7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
7
Item 3. Defaults Upon Senior Securities
7
Item 4. Removed and Reserved
7
Item 5. Other Information
7
Item 6. Exhibits
8
 
 
2

 

PART I
FINANCIAL INFORMATION
 
MEDISAFE 1 TECHNOLOGIES CORP.
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS
MARCH 31, 2011

Financial Statements-
 
   
Balance Sheets as of March 31, 2011 and December 31, 2010
F-2
   
Statements of Operations for the Three Months Ended
 
March 31, 2011 and 2010, and Cumulative from Inception
F-3
   
Statement of Changes in Stockholders’ Equity (Deficit) for the Period from Inception
 
Through March 31, 2011
F-4
   
Statements of Cash Flows for the Three Months Ended March 31, 2011
 
and 2010 and Cumulative from Inception
F-5
   
Notes to Financial Statements
F-6
 
 
F-1

 
 
MEDISAFE 1 TECHNOLOGIES CORP.
 
(A DEVELOPMENT STAGE COMPANY)
 
BALANCE SHEETS
 
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010
 
   
As of
   
As of
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
             
Current Assets:
           
Cash and cash equivalents
  $ 49,101     $ 56,155  
Prepaid expenses
    318,000       24,000  
                 
Total current assets
    367,101       80,155  
                 
Total Assets
  $ 367,101     $ 80,155  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
Current Liabilities:
               
Accounts Payable and accrued liabilities
  $ 33,938     $ 43,568  
Loans from related parties - directors and stockholders
    24,120     $ 14,329  
Convertible note payable, net of discount
    45,665       21,605  
                 
Total current liabilities
    103,723       79,502  
                 
Total liabilities
    103,723       79,502  
                 
Commitments and Contingencies
               
                 
Stockholders' Equity (Deficit):
               
Common stock, par value $.0001 per share, 200,000,000 shares authorized; 53,477,783 and 51,386,750 shares issued and outstanding, respectively
    5,348       5,139  
Additional paid-in capital
    822,068       382,363  
(Deficit) accumulated during the development stage
    (564,038 )     (386,849 )
                 
Total stockholders' equity (deficit)
    263,378       653  
                 
Total Liabilities and Stockholders' Equity (Deficit)
  $ 367,101     $ 80,155  
 
The accompanying notes to financial statements are an integral part of these statements.

 
F-2

 
 
MEDISAFE 1 TECHNOLOGIES CORP.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF OPERATIONS
 
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
 
AND CUMULATIVE FROM INCEPTION (JULY 7, 2009)
 
THROUGH MARCH 31, 2011
 
(Unaudited)

   
Three Months Ended
   
Cumulative
 
   
March 31,
   
From
 
   
2011
   
2010
   
Inception
 
                   
Revenues
  $ -     $ -     $ -  
                         
Expenses:
                       
Research and development
    3,000       -       123,133  
Marketing
    -       -       16,694  
Professional fees
    40,900       4,000       130,327  
Consulting
    110,000       -       234,794  
Filing fees
    -       -       8,000  
Investor relations
    3,641       -       12,798  
Legal - incorporation
    -       -       2,250  
Other
    1,804       50       8,036  
 
                       
Total general and administrative expenses
    159,345       4,050       536,032  
                         
(Loss) from Operations
    (159,345 )     (4,050 )     (536,032 )
                         
Interest and Other Income (Expense)
    (17,844 )     -       (28,006 )
                         
Provision for income taxes
    -       -       -  
                         
Net (Loss)
  $ (177,189 )   $ (4,050 )   $ (564,038 )
                         
(Loss) Per Common Share:
                       
(Loss) per common share - Basic and Diluted
  $ (0.00 )   $ (0.00 )        
                         
Weighted Average Number of Common Shares
                       
Outstanding - Basic and Diluted
    51,386,750       30,000,000          
 
The accompanying notes to financial statements are an integral part of these statements.

 
F-3

 
 
MEDISAFE 1 TECHNOLOGIES CORP.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 
FOR THE PERIOD FROM INCEPTION (JULY 7, 2009)
 
THROUGH MARCH 31, 2011
 
(Unaudited)

                     
(Deficit)
       
                     
Accumulated
       
               
Additional
   
During the
       
   
Common stock*
   
Paid-in
   
Development
       
Description
 
Shares
   
Amount
   
Capital
   
Stage
   
Totals
 
                               
Balance - July 7, 2009
    -     $ -     $ -     $ -     $ -  
                                         
Common stock issued for cash
    30,000,000       3,000       (2,400 )     -       600  
                                         
Net (loss) for the period
    -       -       -       (122,114 )     (122,114 )
                                         
Balance - December 31, 2009
    30,000,000     $ 3,000     $ (2,400 )   $ (122,114 )   $ (121,514 )
                                         
Common stock issued for cash
    20,000,000       2,000       78,000       -       80,000  
                                         
Common stock issued to retire debt
    509,000       51       101,749       -       101,800  
                                         
Common stock issued for services
    140,000       14       27,986       -       28,000  
                                         
Common stock issued for cash
    137,750       14       24,502       -       24,516  
                                         
Common stock issued as compensation
    500,000       50       99,950       -       100,000  
                                         
Convertible note discount
    -       -       32,586       -       32,586  
                                         
Common stock issued for services
    100,000       10       19,990       -       20,000  
                                         
Net (loss) for the period
    -       -       -       (264,735 )     (264,735 )
                                         
Balance - December 31, 2010
    51,386,750     $ 5,139     $ 382,363     $ (386,849 )   $ 653  
                                         
Convertible note discount
                    19,914               19,914  
                                         
Common stock issued for services
    91,033       9       19,991       -       20,000  
                                         
Common stock issued for services
    1,000,000       100       199,900       -       200,000  
                                         
Common stock issued for services
    1,000,000       100       199,900       -       200,000  
                                         
Net (loss) for the period
    -       -       -       (177,189 )     (177,189 )
                                         
Balance - December 31, 2010
    53,477,783     $ 5,348     $ 822,068     $ (564,038 )   $ 263,378  
 
The accompanying notes to financial statements are an integral part of these financial statements.

 
F-4

 
 
MEDISAFE 1 TECHNOLOGIES CORP.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF CASH FLOWS
 
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010,
 
AND CUMULATIVE FROM INCEPTION (JULY 7, 2009)
 
THROUGH MARCH 31, 2011
 
(Unaudited)

   
Three Months Ended
   
Cumulative
 
   
March 31,
   
From
 
   
2011
   
2010
   
Inception
 
Operating Activities:
                 
Net (loss)
  $ (177,189 )   $ (4,050 )   $ (564,038 )
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
                       
Common stock issued for services and compensation
    420,000       -       669,800  
Amortization of beneficial conversion feature
    16,474       -       25,665  
Changes in net assets and liabilities-
                       
Prepaid expenses
    (294,000 )     -       (318,000 )
Accounts Payable and accrued liabilities
    (9,630 )     3,250       33,938  
                         
Net Cash Provided by (Used in) Operating Activities
    (44,345 )     (800 )     (152,635 )
                         
Investing Activities:
    -       -       -  
                         
Net Cash Used in Investing Activities
    -       -       -  
                         
Financing Activities:
            -          
Proceeds from shareholder loans
    9,791       750       64,220  
Payment of shareholder loans
    -       -       (40,100 )
Payment of deferred offering costs
    -       -       (20,000 )
Proceeds from convertible note payable
    27,500       -       72,500  
Proceeds from stock issued
    -       -       125,116  
                         
Net Cash Provided by Financing Activities
    37,291       750       201,736  
                         
Net Increase in Cash
    (7,054 )     (50 )     49,101  
                         
Cash - Beginning of Period
    56,155       600       -  
                         
Cash - End of Period
  $ 49,101     $ 550     $ 49,101  
                         
Supplemental Disclosure of Cash Flow Information:
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
Income taxes
  $ -     $ -     $ -  
                         
Supplemental Schedule of Noncash Investing and Financing Activities:
                       
Shareholder loan to acquire patent
  $ -     $ -     $ 101,800  
Stock issued to retire debt
  $ -     $ -     $ (101,800 )
 
The accompanying notes to financial statements are an integral part of these statements.

 
F-5

 
 
MEDISAFE 1 TECHNOLOGIES CORP.
 
(A DEVELOPMENT STAGE COMPANY)
 
NOTES TO FINANCIAL STATEMENTS
 
March 31, 2011
 
(1) Summary of Significant Accounting Policies
 
Basis of Presentation and Organization
 
Medisafe 1 Technologies Corp. (“Medisafe 1 Technologies” or the “Company”) is a Delaware corporation in the development stage. The Company was incorporated under the laws of the State of Delaware on July 7, 2009. The business plan of the Company is to develop a commercial application of the design in a patent titled “Protector for administering medicine” which is a device that prevents errors in administering medications. The Company also intends to enhance the existing prototype, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device. The accompanying financial statements of Medisafe 1 Technologies were prepared from the accounts of the Company under the accrual basis of accounting.
 
Unaudited Interim Financial Statements
 
The interim financial statements of the Company as of March 31, 2011, and for the period ended March 31, 2010, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2011, and the results of its operations and its cash flows for the periods ended March 31, 2011, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2011. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2010, filed with the SEC, for additional information, including significant accounting policies.
 
Cash and Cash Equivalents
 
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
 
Revenue Recognition
 
The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
 
Share-Based Compensation
 
The Company follows the provisions of ASC 718, “Share-Based Payment.” Which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.
 
Equity instruments issued to non-employees for goods or services are accounted for at either the fair market value of the goods and services rendered or on the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50-30.  

 
F-6

 
 
Loss per Common Share
 
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As the Company has a loss for the period ended March 31, 2011 the potentially dilutive shares are anti-dilutive and therefore they are not added into the earnings per share calculation.
 
Income Taxes
 
The Company accounts for income taxes pursuant to FASB Accounting Standards Codification ("ASC") 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
 
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
 
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
 
Fair Value of Financial Instruments
 
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of March 31, 2011, the carrying value of accrued liabilities, and loans from directors and stockholders approximated fair value due to the short-term nature and maturity of these instruments.
 
Patent and Intellectual Property
 
The Company expenses the costs associated with obtaining a patent or other intellectual property purchased for research and development and has no alternative future use.
 
Deferred Offering Costs
 
The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
 
Impairment of Long-Lived Assets
 
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the period ended March 31, 2011, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.
 
Common Stock Registration Expenses
 
The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are expensed as incurred.

 
F-7

 
 
Estimates
 
The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at March 31, 2011, and expenses for the period ended March 31, 2011, and cumulative from inception. Actual results could differ from those estimates made by management.
 
Recent Accounting Pronouncements
 
In April 2010, the FASB issued ASU No. 2010-17, Revenue Recognition—Milestone Method (ASU 2010-017). ASU 2010-017 provides guidance in applying the milestone method of revenue recognition to research or development arrangements. This guidance concludes that the milestone method is a valid application of the proportional performance model when applied to research or development arrangements. Accordingly, an entity can make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this accounting standard is not expected to impact the Company's financial position or results of operations.
 
In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements upon issuance of this guidance.
 
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements (ASU No. 2010-06). ASU No. 2010-06 requires: (1) fair value disclosures of assets and liabilities by class; (2) disclosures about significant transfers in and out of Levels 1 and 2 on the fair value hierarchy, in addition to Level 3; (3) purchases, sales, issuances, and settlements be disclosed on gross basis on the reconciliation of beginning and ending balances of Level 3 assets and liabilities; and (4) disclosures about valuation methods and inputs used to measure the fair value of Level 2 assets and liabilities. ASU No. 2010-06 becomes effective for the first financial reporting period beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements of Level 3 assets and liabilities which will be effective for fiscal years beginning after December 15, 2010. The Company is currently assessing what impact, if any, ASU No. 2010-06 will have on its fair value disclosures. However, the Company does not expect the adoption of the guidance provided in this codification update to have any material impact on its financial statements.
 
In October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements: a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). ASU 2009-13 establishes a selling-price hierarchy for determining the selling price of each element within a multiple-deliverable arrangement. Specifically, the selling price assigned to each deliverable is to be based on vendor-specific objective evidence (VSOE) if available, third-party evidence, if VSOE is unavailable, and estimated selling prices if neither VSOE or third-party evidence is available. In addition, ASU 2009-13 eliminates the residual method of allocating arrangement consideration and instead requires allocation using the relative selling price method. ASU 2009-13 will be effective prospectively for multiple-deliverable revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010. Presently, the Company is assessing what impact, if any, the adoption of ASU 2009-13 may have on its financial statements.
 
In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides guidance in measuring the fair value of a liability when a quoted price in an active market does not exist for an identical liability or when a liability is subject to restrictions on its transfer. ASU 2009-15 was effective for the Company beginning with the quarter ended December 31, 2009. The adoption of ASU 2009-05 had no impact on the fair value measurements of the Company's liabilities.
 
Fiscal Year End
 
The Company has adopted a fiscal year end of December 31.

 
F-8

 
 
(2) Development Stage Activities and Going Concern
 
The Company is currently in the development stage, and has no sales revenue. The business plan of the Company is to develop a commercial application of the design in a patent titled “Protector for administering medicine” which is a device that prevents errors in administering medications. The Company also intends to enhance the existing prototype, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device.
 
On July 15, 2009, the Company entered into a Patent Transfer and Sale Agreement whereby the Company acquired all of the rights, title and interest in the patent known as the “Protector for administering medicine” for consideration of $100,000 plus legal fees of $1,800. The United States Patent Application 7,347,841 was issued on March 25, 2008.
 
The Company filed  a Registration Statement on Form S-1 with the SEC to register and sell in a self-directed offering 20,000,000 shares (post forward stock split) of newly issued common stock at an offering price of $0.025 per share for proceeds of up to $500,000. The Registration Statement was declared effective March 11, 2010. On June 1, 2010 the Company issued 20,000,000 shares (post forward stock split) of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of $100,000.  The Company incurred $20,000 of deferred offering costs related to this capital formation activity.
 
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of March 31, 2011, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
 
(3) Patent
 
On July 15, 2009, the Company entered into a Patent Transfer and Sale Agreement with two of the Company's directors, whereby the Company acquired all of the rights, title and interest in the patent known as the “Protector for administering medicine” for consideration of $100,000 plus legal fees of $1,800. The United States Patent Application 7,347,841 was issued on March 25, 2008. Under the terms of the Patent Transfer and Sale Agreement, the Company was assigned rights to the patent free of any liens, claims, royalties, licenses, security interests or other encumbrances. The assignment of the patent was recorded at the U.S. Patent and Trademark Office on August 12, 2009. As of December 31, 2010, the historical cost of obtaining the patent, ($100,000) and legal fees ($1,800) for acquiring the patent were expensed as research and development costs.
 
(4) Loans from Related Parties - Directors and Stockholders
 
As of March 31, 2011, loans from related parties amounted to $24,120, and represented working capital advances from officers who are also stockholders of the Company. The loans are unsecured, non-interest bearing, and due on demand.
 
(5) Convertible Note Payable
 
On October 15, 2010 the Company issued a $45,000 convertible promissory note to a third party.  The note bears interest at 8% per annum and is due on July 15, 2011.  The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.  
 
On January 10, 2011, the Company issued a $27,500 convertible promissory note to a third party.  The note bears interest at 8% per annum and is due on October 15, 2011.  The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.

 
F-9

 
 
In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists.  The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470.  Based on the stock price on the day of commitment, the discount as agreed to in the note, and the number of convertible shares, the BCF was valued at $52,500.  The BCF has been recorded as a discount to the note payable and to Additional Paid-in Capital. As of March 31, 2011 the Company has recognized $1,938 in interest expense related to these notes and has amortized $25,665 of the beneficial conversion feature which has been recorded as interest expense.
 
(6) Common Stock
 
On July 12, 2009, the Company issued 30,000,000 shares (post forward stock split) of its common stock to three individuals who are directors and officers for proceeds of $600.
 
 The Company filed a Registration Statement on Form S-1 with the SEC to register and sell in a self-directed offering 20,000,000 shares (post forward stock split) of newly issued common stock at an offering price of $0.025 per share for proceeds of up to $500,000. The Registration Statement was declared effective March 11, 2010. On June 1, 2010 the Company issued 20,000,000 shares (post forward stock split) of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of $100,000.  The Company incurred $20,000 of deferred offering costs related to this capital formation activity.
 
On September 20, 2010, the Company implemented a 5 for 1 forward stock split on its issued and outstanding shares of common stock to the holders of record as of September 17, 2010. As a result of the split, each holder of record on the record date automatically received four additional shares of the Company’s common stock. After the split, the number of shares of common stock issued and outstanding were 50,000,000 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split.
 
On October 1, 2010, the Company issued 509,000 shares of its restricted common stock as repayment of a shareholder loan. The shares were valued at $101,800 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On October 17, 2010, the Company entered into an agreement with an unrelated third-party consultant. 
 
As payment for the consultant’s services, the Company issued 500,000 shares of its restricted common stock on said date valued at $100,000 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On November 29, 2010, the Company entered into an agreement with an unrelated third-party consultant. As payment for the consultant’s services, the Company issued 140,000 shares of its restricted common stock on said date valued at $28,000 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On November 29, 2010, the Company raised $27,500 and issued 137,750 restricted shares of its common stock, purchase price $0.20 per share, to an investor. The Company received proceeds of $24,516 net of a commission paid to a director of the Company.
 
On December 26, 2010, the Company entered into an agreement with an unrelated third-party consultant. As payment for the consultant’s services, the Company issued 100,000 shares of its restricted common stock on said date valued at $20,000 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On February 23, 2011, the Company entered into an agreement with an unrelated third-party consultant. As payment for the consultant’s services, the Company issued 1,000,000 shares of its restricted common stock on said date valued at $200,000 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On February 23, 2011, the Company entered into an agreement with a director and officer of the Company. As payment for services, the Company issued 1,000,000 shares of its restricted common stock on said date valued at $200,000 or $0.20 per share based on the current market price less a discount for restricted trading.
 
On February 23, 2011, the Company issued 91,033 shares of its restricted common stock as payment for legal services. The shares were valued at $20,000.

 
F-10

 
 
(7) Income Taxes
 
The provision (benefit) for income taxes for the period ended March 31, 2011, and 2010 was as follows (assuming a 23% effective tax rate):

   
2011
   
2010
 
             
Current Tax Provision:
           
Federal-
           
Taxable income
  $ -     $ -  
                 
Total current tax provision
  $ -     $ -  
                 
Deferred Tax Provision:
               
Federal-
               
Loss carryforwards
  $ 36,964     $ 932  
Non-deductible amortization
    (3,789 )     -  
Change in valuation allowance
    (33,175 )     (932 )
                 
Total deferred tax provision
  $ -     $ -  
 
The Company had deferred income tax assets as of March 31, 2011 and December 31, 2010, as follows:

   
2011
   
2010
 
             
Loss carryforwards
  $ 123,826     $ 88,975  
Less - Valuation allowance
    (123,826 )     (88,975 )
                 
Total net deferred tax assets
  $ -     $ -  
 
The Company provided a valuation allowance equal to the deferred income tax assets for the period ended March 31, 2011 and December 31, 2010, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
 
As of March 31, 2011 the Company had approximately $538,000 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire by the year 2031.
 
The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed.  The Company did not recognize any interest or penalties for unrecognized tax benefits.
 
The Company has filed income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.
 
 (8)  Related Party Transactions
 
As described in Note 4, as March 31, 2011, the Company owed $24,120 to directors, officers, and principal stockholders of the Company.
 
On July 15, 2009, the Company entered into a Patent Transfer and Sale Agreement to purchase the patent from one of the Company's directors and a brother of the other director, whereby the Company acquired all of the rights, title and interest in the patent known as the “Protector for administering medicine” in consideration of $100,000.
 
On January 1, 2011, the Company entered into an agreement with a director and officer of the Company. As payment for services, the Company issued 1,000,000 shares of its restricted common stock on said date valued at $200,000 or $0.20 per share based on the current market price less a discount for restricted trading.

 
F-11

 
 
(9)  Commitments
 
On August 27, 2009, the Company entered into a Transfer Agent and Registrar Agreement with Nevada Agency and Trust Company (“NATCO”) for transfer agent services. Under the agreement, the Company is obligated to pay annual fees of $1,800 in addition to standard service fees for transfer agent services received. The agreement can be terminated by either party at any time.
 
On November 1, 2010, the Company entered into a Consulting Agreement with a third party medical technology consultant. The term of the agreement ends on December 31, 2011 and may be extended on a yearly basis by the written agreement of both parties. Under the agreement, the Company is obligated to pay fees of 140,000 restricted shares during the term of the agreement.
 
(10) Subsequent Event
 
The Company entered into an Investment Agreement with Centurion Private Equity, LLC (“Centurion”) on April 13, 2011.  Pursuant to the Investment Agreement, Centurion committed to purchase up to $5,000,000 of the Company’s common stock, over a period of time terminating upon the earlier of (i) 24 months from the effective date of the registration statement; or (ii) 30 months from the date of the Investment Agreement, subject to an effective registration statement covering the resale of the common stock and subject to certain conditions and limitations set forth in the Investment Agreement, including limitations based upon the trading volume of the Company’s common stock. The maximum aggregate number of shares issuable by the Company and purchasable by Centurion under the Investment Agreement is that number of shares of common stock having an aggregate purchase price of $5,000,000.  
 
In connection with the preparation of the Investment Agreement and the registration rights agreement, the Company issued Centurion 91,033 shares of common stock as a document preparation fee having a value of $20,000 and 925,526 shares of common stock, having a value of $150,000 (3% of the Maximum Offering Amount) as a commitment fee
 
On April 13, 2011, the Company entered into an agreement with an unrelated third-party consultant. As payment for the consultant’s services, the Company issued 2,000,000 shares of its restricted common stock.
 
On May 5, 2011, the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission to register 8,000,000 shares of its common stock on behalf of selling shareholders, including Centurion.

 
F-12

 

Item 2. Management’s Discussion and Analysis or Plan of Operations.

As used in this Form 10-Q, references to “Medisafe,” “we,” “our” or “us” refer to Medisafe 1 Technologies Corp.

Forward-Looking Statements

This Report contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources.” We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.
 
Company Overview

We were incorporated in Delaware on July 9, 2009 and we are a development stage company. To date we have had limited activities.  We are in the process of establishing a business engaged in the manufacture and distribution of products based upon our patented medical assembly and a protector, or locking mechanism, that is intended to ensure that no substance can be released from the hypodermic needle without positive pre-matching between the substance and the specific patient using a patented technology.

On July 15, 2009, we entered into an exclusive worldwide patent sale agreement (the "Patent Transfer and Sale Agreement") with Yisrael Elhadad and Yisrael Gottlieb, pursuant to which we purchased Patent Number: 7,347,841 (the “Patent”) for a technology for a medical assembly and a protector, or locking mechanism, that is intended to ensure that no substances can be released from the hypodermic needle without positive pre-matching between the substance and the specific patient. The Patent was acquired by us in exchange for the payment to Yisrael Elhadad and Yisrael Gottlieb (our director and chief financial officer) of  One Hundred Thousand United States Dollars (US $100,000).  Our principal business to date has been the acquisition of the Patent and the development of a prototype.    The Medisafe technology has the potential to be adopted as a standard in all major markets, making a decisive contribution towards the elimination of errors from injectable medication.

Our invention, based on the Patent, is a medical assembly which may effectively prevent unauthorized administration of a drug or medicinal substance by hypodermic needle. It accomplishes this by taking a medical assembly and incorporating a locking mechanism that is intended to ensure the substance cannot be released from the hypodermic needle without positive pre-matching between the substance and the specific patient, identified by bar-coding or other identification technology. Since some human interaction will be required in the labeling, administering, and using the intended device, Medisafe cannot entirely remove the risk of human error. It is expected that the system can be applied not only to hypodermic needles, but also to any assembly for storing any kind of medicine.

We have developed a fully operational prototype with PIA Electronics Ltd. (“PIA Electronics”) and have agreed to pay PIA Electronics a commission based upon sales revenue in the amount of ten percent (10%) of all future royalties from the sale and / or licensing of a product which is based on the working prototype manufactured by PIA Electronics.  To date, no products encompassing the patented technology have been sold.

 
3

 

The principle features of the prototype design include a protector which fits over a proportion of the medicine assembly, a bar code and locking element, an electrically operated device to control the locking element, and a connection to a bar code reader. Finally, the protector includes an enclosure that surrounds a container of medicine, whether it be intended for oral intake, transdermal delivery or any other kind of medicinal administration.

The invention, based on the Patent represents a medical assembly which may effectively prevent unauthorized administration of a drug or medicinal substance by hypodermic needle. It accomplishes this by taking a medical assembly and incorporating a locking mechanism that is intended to ensure that no substance can be released from the hypodermic needle without positive pre-matching between the substance and the specific patient, identified by bar-coding or other identification technology. We believe that the system can be applied for various other uses.  We expect the system to be applied not only to hypodermic needles, but also to any assembly for storing any kind of medicine. Since some human interaction will be required in the labeling, administering, and using the intended device, Medisafe cannot entirely remove the risk of human error.

The bar code may be printed on any suitable portion of the protector. The term "bar code" refers not just to a straightforward bar code, but to any optically or machine readable code or character, such as a magnetic strip or computer-recognizable code.

The locking element is electrically operated and opened by means of a bar code reader which reads the bar code and generates an appropriate electrical signal. The electrically operated element may be a solenoid, or alternatively it may be mechanically-operated, hydraulically-operated or pneumatically or any combination thereof. The protector may include more than one section, each selectively lockable to one another by means of a locking element.

Importantly, the bar code may be specific to a certain patient and certain medicine. The medical practitioner should be able to use the bar code reader to read the bar code prior to using the medicine assembly. The locking element will only open if the bar code read by the bar code reader is associated with the correct patient and medicine.

We are in discussions with various hospitals and medical clinics for the implementation of our proprietary technology as part of a pilot and at the same time we are also in discussions with various medical manufacturers in the health care industry regarding the possibility of licensing of our technology accordingly; however there can be no assurance that such discussions will be successful.

On July 12, 2009, we issued 30,000,000 shares (post forward stock split) of our common stock to three individuals who are directors and officers for proceeds of $600.

We filed a Registration Statement on Form S-1 with the Securities and Exchange Commission ( the “SEC”) on March 11, 2010  to register and sell in a self-directed offering 20,000,000 shares (post forward stock split) of newly issued common stock at an offering price of $0.005 (post forward split) per share for proceeds of up to $100,000. The Registration Statement was declared effective March 11, 2010. On June 1, 2010 we issued 20,000,000 shares (post forward stock split) of common stock pursuant to the Registration Statement on Form S-1, and received proceeds of $100,000.  We incurred $20,000 of deferred offering costs related to this capital formation activity.

On September 20, 2010, we implemented a 5 for 1 forward stock split on our issued and outstanding shares of common stock to the holders of record as of September 17, 2010. As a result of the split, each holder of record on the record date automatically received four additional shares of our common stock for each share held. After the split, the number of shares of common stock issued and outstanding were 50,000,000 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split.

As of March 31, 2011, we had 2 full-time employees and 2 part-time consultants.   We currently expect to hire approximately 10-15 employees over the next 12 months, which will cause us to incur additional costs.

Recent Developments

We entered into an Investment Agreement with Centurion Private Equity, LLC (“Centurion”) on April 13, 2011.  Pursuant to the Investment Agreement, Centurion committed to purchase up to $5,000,000 of our common stock, over a period of time terminating upon the earlier of (i) 24 months from the effective date of the registration statement; or (ii) 30 months from the date of the Investment Agreement, subject to an effective registration statement covering the resale of the common stock and subject to certain conditions and limitations set forth in the Investment Agreement, including limitations based upon the trading volume of our common stock. The maximum aggregate number of shares issuable by us and purchasable by Centurion under the Investment Agreement is that number of shares of common stock having an aggregate purchase price of $5,000,000.

 
4

 

We filed a Registration Statement on Form S-1 with the SEC on May 9, 2011 to offer and resell up to $5,000,000 in shares of our common stock by the selling stockholders.  Of such shares, 8,000,000 represent shares that Centurion agreed to purchase if put to it by us pursuant to the terms of the Investment Agreement, subject to volume limitations and other limitations in the Investment Agreement, 1,016,559 shares were issued to Centurion in consideration for the preparation of the documents for its investment and as a commitment fee and 2,000,000 shares represent shares being registered by the other selling shareholder. 

Plan of Operation

General Working Capital

We have only recently commenced operations and have generated only minimal revenues.   Our cash on hand at March 31, 2011 was $49,101.  Our working capital as of March 31, 2011 was $263,378. Cash and cash equivalents from inception to date have been sufficient to provide the operating capital necessary to operate to date.

Since inception, we have financed our operations from the sale of common stock and other securities and loans from investors and related parties. Based upon our historical revenue, we do not  anticipate that we will have revenue for quite awhile and therefore our sales in the future will  not be sufficient to meet our cash flow requirements. To date, we have not generated any revenue.  We incurred a net loss of $177,189 for the quarter ended March 31, 2011, as compared with a net loss of $4,050 for the quarter ended March 31, 2010.  This increase was mainly attributable to the professional and consulting fees relating to our company becoming a public company in 2010 and to a lesser extent expenses incurred in developing the prototype and investor relations services. Our cumulative net loss since inception is $564,138, which is comprised entirely of general and administrative expenses.
 
We will need to raise additional money in order to commercialize our product and establish a sales network for the distribution of our products and to advertise such products. In addition, we will need to hire personnel to run our day to day operations. If we are unable to obtain this additional working capital, or if we encounter unexpected expenses, we may not have enough working capital to implement our business plan.
 
Liquidity and Capital Resources
 
To date, we have financed our operations from the sale of our common stock and notes and contributions from related parties.  However, we will need additional funding in order to pursue our business objectives. Our recent sources of funding have been loans pursuant to convertible notes.  On October 15, 2010 and January 10, 2011 we raised money through the issuances of notes, one in the principal amount of $45,000 and the other in the principal amount of $27,500. The notes mature on July 15, 2011.  The notes have conversion rights that allow the holder of the notes at any time to convert all or any part of the remaining principal balance into our common stock at a price equal to 58% of the average of the lowest three trading prices for the common stock during the most recent ten day period. Although we have recently entered into an equity line with Centurion, there can be no assurance that we will meet the requirements needed in order to enable us to use the equity line. There can be no assurance that additional funding will be available to us or that we will generate enough revenue to pay back the outstanding notes when due. 
 
We do not believe that our cash resources will be sufficient to fund our expenses over the next 12 months. There can be no assurance that additional capital will be available to us or that the equity line will provide the needed funds. We are currently in discussions with certain financial entities for equity funding. Since we have no such arrangements in effect, our inability as such to raise funds for the above purposes will have a severe negative impact on our ability to remain a viable company.
 
For the three months ended March 31, 2011 our net cash used in operating activities was $44,314 as compared to $800 for the quarter ended March 31, 2010. The primary adjustment to our cash from operations were common stock issuances for services and compensation and a reduction in prepaid expenses.  Net cash used in investing activities for the quarter ended March 31, 2011 was $37,291 and included $27,500 of the proceeds from a third party loan and $9,791 of the proceeds from a shareholder loan.

We expect to incur a minimum of $75,000  in expenses during the next twelve months of operations.  Accordingly, we will have to raise the funds to pay for these expenses. We might do so through a private offering. We potentially will have to issue debt or equity or enter into a strategic arrangement with a third party.

 
5

 

Going Concern Consideration

In their opinion regarding our financial statement for the year ended December 31, 2010, our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Results of Operations for the Three Months Ended March 31, 2011

We have only recently commenced operations and have generated only minimal revenues.  For the quarter ended March 31, 2011 we incurred operating expenses of $159,345 as compared to $4,050 for the quarter ended March 31, 2010.  The increase in expenses was attributable to consulting and professional fees including equity compensation incurred in relation to the business development and marketing of our patented technology. We anticipate incurring increased expenses to further market our patented technology and will require additional funding to support our working capital needs.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk.

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officers have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to our company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive officer and principal financial and accounting officer.

Changes in Internal Controls over Financial Reporting

There have been no changes in our company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our company's internal control over financial reporting.

 
6

 

PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which our company is a party or in which any director, officer or affiliate of our company, any owner of record or beneficially of more than 5% of any class of voting securities of our company, or security holder is a party adverse to our company or has a material interest adverse to our company. Our property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors.

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On February 23, 2011, in connection with the Investment Agreement with Centurion, we issued an aggregate of 1,016,559 shares of our common stock to Centurion. These securities were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended.  The issuance did not involve any general solicitation or advertising by us.  Centurion acknowledged the existence of transfer restrictions applicable to the securities sold by us.  Certificates representing the securities sold contain a legend stating the restrictions on transfer to which such securities are subject.
 
On February 23, 2011, we issued 1,000,000 shares of our restricted common stock to an officer and director as compensation for 2011.  The transaction is exempt from registration pursuant to an exemption from registration provided by Regulation S of the Securities Act of 1933, as amended.

On February 23, 2011, we issued 1,000,000 shares of our restricted common stock to an unrelated third-party consultant as payment for the consultant’s services.  The transaction is exempt from registration pursuant to an exemption from registration provided by Regulation S of the Securities Act of 1933, as amended.

On April 13, 2011, we entered into an agreement with an unrelated third-party consultant. As payment for the consultant’s services, we issued 2,000,000 shares of our restricted common stock on said date. This transaction is exempt from registration pursuant to an exemption from registration provided by Regulation S of the Securities Act of 1933, as amended.

Item 3.  Defaults Upon Senior Securities.

None.
 
Item 4. (Removed and Reserved).

Item 5. Other Information.
 
None.

 
 
7

 

Item 6. Exhibits

10.1
 
Investment Agreement (incorporated herein by reference to the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011)
     
10.2
 
Registration Rights Agreement (incorporated herein by reference to the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011)
     
31.1
 
Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
     
31.2
 
Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
     
32.1
 
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)
     
32.2
  
Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)
 
 
8

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 17, 2011
Medisafe 1 Technologies Corp.
   
 
By:
/s/ Jacob Elhadad
 
Name: Jacob Elhadad
 
Title: President and Director
 
 (Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date  May 17, 2011
By:
/s/ Jacob Elhadad
 
Name: Jacob Elhadad
 
Title: President and Director
 
 (Principal Executive Officer)

Date: May 17, 2011
By:
/s/ Yisrael Gottlieb
 
Name: Yisrael Gottlieb
 
Title: Secretary and Director
 
 (Principal  Internal Accounting  and Financial Officer)
 
 
9